Judgment :- RE: STRP No 21 of 2009: This is a revision petition by the revenue under Section 23(1) read with Section 8-A of the Karnataka Sales Tax Act, 1957 [for short the Act], directed against the order dated 10-4-2008 passed by the Karnataka Appellate Tribunal, Bangalore in STA No 2285 of 2004, where under the tribunal had allowed the appeal of the respondent-assessee, an appeal filed under Section 22 of the Act, which in turn was directed against the order dated 7-8-2004 passed by the first appellate authority [Deputy Commissioner of Commercial Taxes (Appeals and Audit), Mangalore, in appeal No KST/AP 6/04-05. The first appeal itself was directed against an order dated 22-4-2004, passed by the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, calling upon the respondent – owner of the vehicle-cum-oil tanker bearing registration No KA 19 A-4060 to pay a sum of Rs24,523/- representing the tax liability on 12 kiloliter of superior kerosene oil of the value of 1,63,488, in respect of which the check-post authorities had issued transit pass No 0107642 dated 25-6-2003 and which transit pass had not been surrendered by the person in-charge of the vehicle carrying goods at the stipulated exit point within the permitted time, thereby attracting tax liability in terms of the provisions of Section 28-AA of the Act and a further penalty of Rs 49,046/- as per the order of even date. 2. The Commercial Tax Officer. Sales Tax Check-post, Mukka, Mangalore, had assessed the tax and also mulcted thereafter with penalty, for the reason that the transporter had failed to produce the transit pass, within the permitted time and therefore a presumption in terms of sub-section (4) of Section 28-AA of the Act to the effect that the goods in question has been sold within the state by the owner of the vehicle which automatically arises, as per the statutory provision and consequently not only liable to pay tax in terms of sub-section (4) of Section 28-AA of the Act but also liability to pay penalty in terms of sub-section (5) of Section 28-AA of the Act. 3. It is because the appellate tribunal in terms of its impugned order dated 10-4-2008 has allowed the appeal filed by the owner of the goods carrier and has set aside the levy of tax and penalty on the respondent, the present revision petition by the revenue. 4. 3. It is because the appellate tribunal in terms of its impugned order dated 10-4-2008 has allowed the appeal filed by the owner of the goods carrier and has set aside the levy of tax and penalty on the respondent, the present revision petition by the revenue. 4. The reason assigned by the tribunal for allowing the appeal is that the goods viz., superior quality kerosene oil while was a taxable goods as per Entry-1 of Part-K of second schedule to the Act, the rate at which this goods was to be taxed varied from time to time, starting from 1.4.1988 onwards and during the relevant point of time, the outer limit of the date within which the goods should have exited from the border of the State was 48 hours from the time when the goods crossed the check-post at Mukka, Mangalore, being at about 9.30 am on the 25th June 2003, and the exit pass which should have been surrendered at the exit check post at Nippani check-post by 9.30 pm on 27-6-2003, though had not been actually so surrendered and therefore a presumption under sub-section (4) of Section 5, attracting liability towards tax and penalty, in the wake of the notification No FD 167 CSL 2003(P)(1) dated 31-5-2003, the transaction, which was actually an inter-state transaction by the consignor M/S AVR Overseas Pvt Ltd, Mangalore in favour of a consignee out side of the state of Karnataka namely M/S Jai Bherunath Traders, Silvassa, would become a local sale and attracting single point tax on such sale at the rate of 16%on the value of the goods and if so, the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, instead of taxing and mulcting the owner of the goods career with tax liability and penalty, by reopening the concluded assessment of the consignor invoking Section 12-A of the Act, should have explored the position as it prevails in law, when a goods subject to a single point levy of sales tax within the state is sold again within the state for the second time, as an intra-State sale, in which event, the tax liability is nil, as it will be a second sale within the state and, therefore, there was no need to either levy the tax or penalty on the owner of the goods career and if the goods is deemed to have been sold within the state of Karnataka in favour of the respondent, by the owner of the goods career, it will have to be presumed that by not producing the transit pass, it is not the owner of the vehicle who has sold kerosene oil within the state of Karnataka and even if such a presumption is invoked, the owner will not be liable to tax, for the reason that the sale by the owner of the goods career of the goods namely kerosene oil within the state of Karnataka, will be a second sale and will be exempt in terms of the Govt Notification No FD 54 CSL 2002 (4) dated 30-3-2002 and as such cannot attract any tax liability whatsoever, on the presumption of there being a local sale and therefore was not required to be brought to tax under Section 28-AA of the Act. For such purpose, the tribunal had followed the judgment of the Supreme Court rendered in the case of STATE OF PUNJAB vs MULAKH RAJ NAND LAL [50 STC 101]. 5. It is on the basis of such reasoning and with a further direction that a copy of the order of the tribunal be furnished by the assessing authority to M/s AVR Overseas Pvt Ltd., Mangalore, to initiate action against the said consignor and that there being no tax liability on the owner of the goods vehicle, there cannot be any penalty and in this view of the matter, allowed the appeal in toto. 6. It is under these circumstances, the present revision petition by the state-revenue. 7. This revision petition had been admitted to examine the following questions of law, as raised in the memorandum of revision petition: QUESTIONS OF LAW (a) Whether, on the facts and in circumstances of the case, can it be held that the order dated 10.4.2008 passed by the Karnataka Appellate Tribunal in STA 2285/2004 is correct and in accordance with law? (b) Whether on the facts and in circumstances of the case, can it be held that the Appellate Tribunal was right in law in holding that since the respondent’s goods vehicle was not hired by anyone, the question of fastening liability on the hirer of the goods vehicle by invoking the legal fiction contained in explanation to Section 28AA does not arise in the instant case? (c) Whether on the facts and in circumstances of the case, can it be held that the Appellate Tribunal erred in misinterpreting the explanation to s.28-AA of the KST Act? (d) Whether on the facts and circumstances of the case can be held that the judgment of the Tribunal will good in view of the 12. That the order of the Tribunal is liable to be set aside in view of the judgment of the Apex Court in Sri Gopalakrishna Shetty vs. State of Karnataka & anr wherein the order of the High Court which set aside the tax and penalty under s.28AA (4) (5) of the Act was set aside and matter remanded to the Check pose officer to dispose off the matter in view of the explanation to section 28AA? and the following additional question of law permitted to be raised as per our order dated 28-10-2009: Whether on the facts and in circumstances of the case, can it be held that the Appellate Tribunal was right in law in holding that the respondent was a second dealer in superior kerosene and hence entitled for exemption from payment of tax? 8. The revision petitioner-revenue has contended that the order passed by the tribunal is not only illegal, but virtually without jurisdiction; that the tribunal has grossly erred in surmising that the tax liability should be fastened on the consignor M/s AVR Overseas Pvt ltd., and therefore should not be assessed in the hands of the owner of the goods vehicle; that the notification dated 30-3-2002, with reference to Section 6-B of the Act, would not absolve the respondent from any liability towards payment of tax under the Act; that the tribunal has committed an error in purporting to apply and follow the decisions of the Supreme Court in the case of M/S Sodhi Transport Companty Vs State Of Up [62 Stc 381] And State Of Punjab Vs Mulakh Raj Nand Lal [50 Stc 101] to be one attracted to the facts of the present case; that the tribunal should have followed and applied the judgment of the Supreme Court in the case of Sri Gopalakrish Shetty Vs State Of Karnataka [(2008) 13 Vst (Sc)] in interpreting the very provisions of Section 28AA of the Act, wherein the Supreme Court had set aside the earlier order of the high court where under the High court had set aside the tax and penalty under sub-sections (4) and (5) of Section 28-AA of the Act respectively and remanded the matter to the check post officer; that the order passed by the tribunal is totally illegal and prejudicial to the interests of the State and therefore should be set aside and the order passed by the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore and affirmed in the first appeal should be restored. 9. Appearing on behalf of the appellant-revenue. 9. Appearing on behalf of the appellant-revenue. Ms Geetha Menon, learned Additional Government Advocate, would very vehemently urge that the tribunal has totally misunderstood and misapplied the principles of law, in terms of Section 28-AA of the Act; that the tribunal has failed to notice the liability in terms of sub-section (4) of Section 28-AA of the Act is only on the owner of the vehicle transporting the goods; that on the transporter failing to produce the transit pass within the stipulated time and thereby failing to establish that the goods in question has been taken out of the border of the State to make the sale transaction to be an inter-state sale transaction and the transporter admittedly having failed in not only not surrendering the transit pass at the border check post within the stipulated time, but also failing to establish by cogent material that the very goods, in fact, has been moved out of the state and in such circumstance, the driver or the person in charge of the vehicle having failed to comply with the mandatory requirements of sub-section (2) of Section 28-AA of the Act, the consequences as per sub-sections (4) and (5) of Section 28-AA of the Act inevitably follows and as there was no other question that was required to be examined by the tribunal and that the tribunal should have dismissed the appeal and has therefore urged that the order of the tribunal should be set aside and the order passed by the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, affirmed in appeal by the first appellate authority, should be restored by allowing this revision petition. 10. 10. On the other hand, Ms Vani H. learned counsel for the respondent-owner of the vehicle in question, has drawn our attention to the provisions of sub-section (1) of Section 28-AA of the Act and also the provisions of Rule 23-F of the Karnataka Sales Tax Rules, 1957 [for short, the Rules], governing the procedure to be followed by a person in charge of a goods vehicle carrying goods which are in transit and passing through the state of Karnataka as part of the inter-state transaction, particularly to the provisions of sub-rule (2) of Rules 23F, which reads as under: 23-F. The transit of goods by road through the State and issue of transit pass:- (1) xxx (2) The officer-in-charge of the entry checkpost or such officer empowered shall, after examining the document and after making such enquiries as he deems necessary issue a pass on the duplicate and triplicate copies of the application, retaining the original himself. The pass shall specify the checkpost or the barrier (hereinafter referred to as the exit checkpost) of the State to be crossed by the vehicle if any established, the route to be followed and the date and time upto which it should be so crossed. to submit that a mere non-production of transit pass in itself cannot conclude the issue against the owner in the present case, that if the transporter had been provided only with a delivery note and not a transit pass, there is no way of the transporter producing transit pass at the exit check post, and therefore the failure, attracting tax liability and penalty in terms of sub-sections (4) and (5) of Section 28-AA did not arise: that the presumption that the consignee is a bogus person or a non-existent person on the part of the authorities was not at all warranted even as based on some intelligent report and the owner of the vehicle having not even been provided with the information which the authorities had gathered, may be from its intelligence wing, the presumption that the consignee is a non-existent person was totally against the principles of natural Justice and to verify these aspects, the matter may have to go back to the authorities. 11. Learned counsel for the respondent would also draw out attention to the letter dated 26-80-2003 originating from the consignee, addressed to the Commercial Tax Officer. 11. Learned counsel for the respondent would also draw out attention to the letter dated 26-80-2003 originating from the consignee, addressed to the Commercial Tax Officer. Sales Tax Check-post, Mukka, Mangalore, indicating that the very goods career carrying kerosene oil had reached its destination and had written to them that on 26-3-2003, the carrier had unloaded the goods, which in effect would substantiate that the goods had not be locally sold and therefore it is not merely a transaction of inter-state sale but also and a genuine one, and the consignee being a real person, who had actually received the goods and in this state of facts, there is no way of the Commercial Tax Officer, Sales Tax check-post. Mukka, Mangalore either levying or imposing penalty under the provisions of Section 28-AA of the Act and therefore the order passed by the tribunal does not warrant any interference and the appeal should be dismissed. 12. It is also pointed out that the transporter having been provided with the delivery note, there was no need on the part of the transporter to apply and obtain a transit pass and with the orders of the authorities not discussing anything about the production of delivery note and on the other hand there being a presumption that it had been delivered to the check post officer and with the further version that transit pass could not be surrendered by the transporter, as, according to the transporter, the transit pass, even if it had been issued, had been collected by a representative of the consignor who was accompanying the goods, levying sales tax on the transporter under sub-section (4) of Section 28-AA of the Act and further levy of penalty under sub-section (5) is totally unwarranted and is illegal and therefore submits that the tribunal has rightly interfered with the matter and urges for dismissal of the revision petition. 13. Ms Vani also draws our attention to the provisions of sub-section (4) of Section 28AA of the Act and submits that the presumption in this proviso does not arise against the respondent-owner of goods career, particularly for subjecting the owner of the vehicle to tax and penalty only for the reason of non-production of transit pass and submits that for this reason also, the revision petition is to be dismissed. 14. 14. Learned counsel for the respondent would also submit that the reasoning of the tribunal to allow the appeal before it by following the decision of the Supreme Court in the case of MULAKH RAJ NAND LAL. [supra] is apt, justified and for this reason also the revision petition should be dismissed. 15. We have perused the order sought to be revised as also the orders passed by the first appellate authority and the original authority and also looked into the records produced by the learned AGA, and have bestowed our attention to the submissions made at the bar by the learned AGA, appearing for the appellant-state and the learned counsel appearing for the respondent. 16. In so far as the facts are concerned, they are not in dispute and it is the case of the respondent that he was transporting kerosene oil, which had been imported by the consignor at the New Mangalore Port and the imported oil had been loaded into the tanker of the respondent, had passed through the sales tax check-post, at Mukka, Mangalore, carrying the oil intended to be delivered to the consignee M/s Jai Bherunath Traders, Rakholi, Silvassa. The vehicle carrying 12 kiloliter superior quality kerosene oil valued at Rs.1,63,488/- did arrive at the sales tax check-post, Mukka, Mangalore on 25-6-2003 and vehicle bearing registration No.KA-19 A-4060 carrying this oil was required to go out of the state border by or before 9.20 pm on 27-6-2003 and the transit pass was required to be surrendered at the sales tax check post at the exit point. It is not in dispute that by 27-6-2003 the transit pass was not surrendered and the Commercial Tax Officer. Sales Tax Check-post, at Nippani, through which the vehicle should have passed through, addressed a letter to his counterpart at Mukka. Mangalore as per his letter dated 27-6-2003 and on 12-8-2003, the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore issued a show cause notice to the respondent herein proposing action under Section 28-AA of the Act and eliciting an explanation from the respondent. The respondent filed an application seeking for ten days’ time for obtaining and submitting the confirmation letter from the consignee, to prove that the goods has actually been delivered to the consignee. On 28-8-2003, the respondent filed a confirmation letter from the consignee also indicating that the consignee has been taxed. The respondent filed an application seeking for ten days’ time for obtaining and submitting the confirmation letter from the consignee, to prove that the goods has actually been delivered to the consignee. On 28-8-2003, the respondent filed a confirmation letter from the consignee also indicating that the consignee has been taxed. On 28-10-2003, the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore called upon the respondent to produce a certificate from the sales tax authorities at Silvassa to indicate that the consignee had duly accounted for the receipt of superior kerosene oil worth Rs. 1,63,488/-. On 5-11-2003, there was an inspection at the consignee’s premises and it was noticed that the consignee had not filed its returns till 5-11-2003 and a further information thereafter indicated that there was no person carrying any transactions in superior kerosene oil at the address and no name board was exhibited at the place. The Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, thereafter, has given an endorsement to the respondent to the effect that the confirmation letter filed by the respondent about the goods having been delivered at the consignee’s place and the consignee having received it, is not an acceptable piece of evidence and as a follow-up action, indicated that there was no person by the name of consignee carrying on business at the address furnished by the respondent. It was thereafter, the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore passed an order on 22-4-2004 levying tax and imposing penalty. 17. In this state of facts, it is very obvious that there is failure of the mandatory requirement of sub-section (2) of Section 28-AA of the Act by the transporter. Section 28-AA, which is an addition to the parent Act in terms of Act No 14 of 1987, introduced with effect 1-4-1988, and which has seen further amendments, which reads as under: 28-AA. Transit of goods by road through the State and issue of transit pass:- (1) Where a vehicle is carrying goods taxable under this Act. (a) from any place outside the State and bound for any place outside the State and passes through this State: or (b) and which goods are imported into the State from any place outside the country and such goods are being carried to any place outside the State. (a) from any place outside the State and bound for any place outside the State and passes through this State: or (b) and which goods are imported into the State from any place outside the country and such goods are being carried to any place outside the State. The driver or any other person-in-charge of such vehicle shall furnish the necessary information and obtain a transit pass in duplicate containing such particulars as may be prescribed, from the officer-in-charge of the first checkpost or barrier after his entry into the State or after movement has commenced from the State as the case may be, or from the officer empowered for the purposes of sub-section (3) of Section 28-A, upon interception of the goods vehicle after its entry into the State of after movement has commenced as the case may be. (2) The driver or the person-in-charge of the vehicle shall deliver within the stipulated time a copy of the transit pass obtained under sub-section (1) to the officer-in-charge at the last checkpost or barrier before his exit from the State. (3) If for any reason, the goods carried in a goods vehicle are, after entry into the State, or after commencement of movement, as the case may be not moved out of the State within the time stipulated in the transit pass, the owner of the goods vehicle shall furnish to the officer empowered in this behalf the reasons for such delay and other particulars, if any, thereof and such officer shall after due enquiry extend the time of exist by suitably amending the transit pass: Provided that where the goods carried by a vehicle are, after their entry into the State, or after commencement of movement, as the case may be transported outside the State by any other vehicle or conveyance, the onus of proving that the goods have actually moved out of the State shall be on the owner of the vehicle who originally brought the goods into the State. (4) If the driver or any other person-in-charge of the vehicle does not comply with subsection (2), it shall be presumed that the goods carried thereby have been sold within the State by the owner of the vehicle and shall, notwithstanding anything contained in sub-section (5) of Section 5, be assessed to tax by the officer empowered in this behalf in the prescribed manner. (5) If the owner of the vehicle having obtained the transit pass as provided under subsection (1) falls to deliver the same as provided under sub-section (2), he shall be liable to pay by way of penalty a sum not exceeding double the amount of tax leviable on the goods transported.’ (6) The amount of tax and the penalty levied under this Section shall be recovered in the prescribed manner. (7) Where the owner of the vehicle who is assessed to tax under sub-section (4), is carrying after such assessment, any goods taxable under this Act in a goods vehicle from any place outside the State or movement from within the State, as the case may be and bound for any other place outside the State and is passing through the State, the prescribed authority may demand from such owner an amount equivalent to two times the tax leviable on such goods under this Act as security. (8) The prescribed authority after being satisfied that the goods carried in the goods vehicle in respect of which the security amount under sub-section (7) was collected, has passed through the State, shall refund such security amount to the owner. (9) The prescribed authority may be an order adjust the whole or any part of security amount towards any amount of tax or penalty payable under this section by such owner. Section by such owner. Explanation:- In case where a vehicle owned by a person is hired for transportation of goods by some other person including a transporting or any other similar agency, both the persons shall for the purposes of this Section, be deemed to be the owner of the vehicle, and shall be jointly and severally liable to pay any amount of tax or penalty payable. This is a piece of legislation added to the parent Act for the purpose of checking diversion of goods midway which are goods either in transit in the wake of inter-state sale or goods imported in the state of Karnataka being sent outside the State. 18. This is a provision introduced purely to prevent leakage of revenue by dealers putting forth false claims of inter-state transactions and evading tax, even when goods were sold locally. 19. 18. This is a provision introduced purely to prevent leakage of revenue by dealers putting forth false claims of inter-state transactions and evading tax, even when goods were sold locally. 19. While, like all taxing statutes, Section 28-AA of the Act requires a strict construction, the purpose and object of introducing this Section should be borne in mind while interpreting and understanding these statutory provisions. 20. Sub-section (2) of Section 28-AA of the Act mandates the driver or the person in charge of the vehicle to deliver the transit pass obtained in terms of sub-section (1) at the time of goods passing through the exit check-post. Sub-section (3) while provides for a little leeway in favour of the transporter, who, on furnishing cogent and convincing reason for the delay in moving the goods, can, on an application, seek for extension of time for moving out the goods and surrender the transit pass. 21. If the goods which are to be transported out of the state are, by any chance, was moved out for any reason using another vehicle, then, the onus of proving that such vehicle carrying the very goods had moved out of the state carried in a different vehicle is clearly cast on the owner of the vehicle who originally brought the goods into the state and a failure will automatically rope in the owner of the vehicle which originally brought the goods into the state, for meeting the liabilities incurred in terms of sub-section(4)and (5) section of the Act. 22. Even after a thorough examination of the records and a detailed consideration of submissions made at the Bar, we have not found any material to support the versions of the respondent owner of the vehicle that either the goods have been actually delivered at the place of the consignee or to say that the very goods in fact have been moved out of the state and in a different vehicle. 23. No material was placed before the authorities and the lower appellate authority to substantiate a justification for extension of time to surrender the transit pass, but more importantly, even after extension of time for surrendering the transit pass, it has got to be surrendered and a non-surrender inevitably attracts the consequence of subsections (4) and (5) of Section 28-AA of the Act. 24. 24. A filmsy excuse on the part of the respondent-transporter that a representative of the consignee/consignor had collected the transit pass and that can be either verified or collected from the said representative, is neither here nor there and at any rate does not relieve the owner of the goods vehicle from the operation of Section 28-AA of the Act, particularly sub-sections (4) and (5). 25. The liability in terms of Section 28-AA of the Act is on the owner of the vehicle transporting the goods and the flawed reasons and versions of the tribunal in concluding that the goods having been notified as one liable for tax at a single point and therefore the owner cannot be mulcted with any liability, on the premise that the goods is already sold by the consignor to the transporter and therefore amounts to a second sale by the transporter, even if it is sold within the state, is a non-existent situation, which does not follow in law nor has been made out on facts. 26. This is nothing but a fertile piece for imagination on the part of the learned members of the tribunal, which is nothing short of a perverted way of dealing with the matter and we strongly deprecate the members of the tribunal resorting to such dubious ways to absolve the respondent from an inevitable statutory consequence. 27. The reliance placed by the tribunal on the two decisions of the Supreme Court, referred to supra, is totally inappropriate judgments have no bearing on the facts of the present case. The present case requires to be decided only on the application of the provisions of Section 28-AA of the Act, as, on admitted facts, this was a situation of goods being in transit and transit pass having not been surrendered at the exit point and therefore attracting the consequences in terms of sub-sections (4) and (5) of Section 28-AA of the Act. 28. The order passed by the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, levying tax and imposing penalty, and the order passed by the first appellate authority, upholding the same, are perfectly valid and justified on facts and on law and there was absolutely no reason for the tribunal to have interfered with these well considered orders. 28. The order passed by the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, levying tax and imposing penalty, and the order passed by the first appellate authority, upholding the same, are perfectly valid and justified on facts and on law and there was absolutely no reason for the tribunal to have interfered with these well considered orders. The reasoning given by the tribunal to set aside such orders and to allow the appeal is rather perverse on non-existent factual position and on untenable legal position, and therefore, the revision petition has to be inevitably allowed. 29. In the result, STRP 21 of 2009 is allowed, answering the questions of law framed in favour of the revenue and against the respondent-assessee. The order passed by the tribunal is set aside and the order passed by the commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, affirmed by the first appellate authority, is restored. RE:STRP NO 22 OF 2009: 30. In this revision petition, except for the fact that the vehicle involved and the quantity and value of the goods transported, all other facts and circumstances are identical with the facts and circumstances that existed in the earlier revision petition [STRP NO 22 of 2009] and therefore, for the very reasons mentioned by us while disposing the said revision, this revision is also allowed on identical terms. The impugned order of the tribunal is set aside and the order passed by the Commercial Tax Officer, Sales Tax Check-post, Mukka, Mangalore, affirmed by the first appellate authority, is restored.